Amid federal pressure, Atlanta forced to evaluate vaunted contract diversity goals
Since the Trump administration began taking aim at diversity initiatives and federal minority contracting rules, local governments and airports have been left with the prospect of losing federal funds if they stand by their own contract diversity goals.
A January executive order requires agency heads to add a line to all contracts certifying that contractors do “not operate any programs promoting (diversity, equity and inclusion) that violate any applicable Federal anti-discrimination laws.”
Like many localities, Atlanta is reliant on hundreds of millions of federal dollars for projects ranging from airport concourse construction to Beltline expansion and housing programs. And with this year’s federal cuts, the city has already seen hundreds of millions of dollars in housing and infrastructure funds disappear or come under risk.
But Atlanta is also where then-Mayor Maynard Jackson pioneered minority contracting 50 years ago and arguably forged the city’s reputation as a hub of Black entrepreneurship in the process.
A U.S. Department of Transportation minority contracting program — under threat in the courts — was inspired by Atlanta’s.
As a result, the issue is weighing heavily on the city’s leaders.
Mayor Andre Dickens told The Atlanta Journal-Constitution that it is “one of the most consequential moments in our history.”
The minority and small business contracting rules that have “made Hartsfield-Jackson the world’s busiest and most efficient airport,” he said, are “now being challenged and threatened.”
His team is meeting every other day to discuss what to do, he said.
Some municipalities have already backed down from their own diversity initiatives and minority contracting goals, replacing them with race- and gender-neutral small business programs.
Nashville International Airport in August removed consideration of race and gender from its own small business contract goals.
In a different strategy, a large group of unions and municipalities in May opted to sue the administration over the issue to try to protect their federal funds.
Hartsfield-Jackson Atlanta International Airport and MARTA told the AJC there are no changes planned to business diversity targets at this time.
But Dickens said Atlanta leadership is “thinking through what our best course of action is.”
“We have seen the results and the benefits (of the programs) and we want it to continue. But could it take a different spin and still get the same outcome?”
What exactly could change about programs like the city’s Equal Business Opportunity program to keep it within the bounds of the federal government’s new rules? “We’ve got to figure that out,” Dickens said.
The program has a 35% target: 25% for minority-owned businesses and 10% for women-owned firms. But the implications of coming into compliance with the federal order could stretch broadly across the city’s inclusion initiatives, not just contracting programs.
Proponents say the goals have created a pathway for success for small and minority-owned businesses that cannot compete at scale with larger corporations; opponents have labeled it racial discrimination.
In the meantime, businesses that participate in the programs hang in limbo.
Even many experts contacted by the AJC aren’t certain what lies ahead.
A Black ‘mecca’
Atlanta bills itself as a “mecca” for Black businesses. And minority contracting programs have been an avenue for growth to those trying to break into capital-intensive industries like construction and airport concessions.
“Think about the history of Atlanta,” airport General Manager Ricky Smith told the AJC Editorial Board in July when asked about the threat to the program.
“Part of the reason why (Atlanta is) the pride of the South is because it is the living room of the Civil Rights Movement. Backing away from that legacy is going to be a very difficult decision to make because it is so intertwined with the legacy and the fabric of this community,” he said.
Over the last decade, about $1.4 billion of the $5.2 billion, or 27%, of capital expenditure dollars spent by Hartsfield-Jackson have been awarded to certified small, minority- and women-owned businesses, according to airport figures.
But though it outpaces every other metro area, the region’s rate of Black-owned firms with employees remains far below parity. Only 11% are Black-owned, compared to a 37% Black population, according to the Brookings Institution.
Rodney Strong, an Atlanta-based expert in procurement diversity and the city’s former director of contract compliance, said he has clients across the country, including the city of Atlanta, seeking guidance in this moment.
Today’s pressure on minority contracting programs is an “organized, well-thought-out attack” and a “three-front struggle.”
First, there are the executive actions, which have prompted municipalities to adjust their own minority contracting goals for nonfederally funded projects.
Then, there’s a pending court case challenging the constitutionality of the federal U.S. Department of Transportation disadvantaged business enterprise, or DBE, program, which was created by Congress decades ago. The Biden administration was defending it, but in May, Trump officials instead proposed a settlement to end the program entirely.
A collection of minority contractors and associations stepped in to fill the legal defense void, including the Airport Minority Advisory Council, which is chaired by Smith, Hartsfield-Jackson’s leader.
Strong expects this lawsuit to end up before the Supreme Court, which has upheld the DBE program before, he said.
The third front involves Indiana’s recent request to the federal government to immediately begin waiving DBE diversity goals while the lawsuit remains pending. Georgia Attorney General Chris Carr recently signed a letter in support alongside other Republican-led states.
A U.S. DOT spokesperson told the AJC that Indiana’s request is under “active consideration.”
A Georgia Department of Transportation spokesperson confirmed the agency has not applied for its own waiver nor, to her knowledge, intends to.
Regardless, GDOT has already received notices instructing it to remove goals from certain projects, the agency confirmed.
That’s because a preliminary injunction in the DBE lawsuit ruled that any projects the plaintiffs have bid on are exempted piecemeal from the minority contracting rules.
The state agency did not say how many projects have been affected.
While MARTA has not changed its minority contracting goals, earlier this year, the agency did change the name of its “Office of Diversity and Inclusion” to the “Office of Corporate Compliance and Engagement.”
“We’re trying to evolve along with the country, make sure that we are inclusive to all,” Paula Nash, the office’s assistant general manager, told the AJC.
‘Nobody’s giving us anything’
For Bill Swift, a longtime Atlanta concessionaire and the city’s former procurement director, a possible loss of these programs is “very concerning.” He is a participant in the federal airport concessions-specific ACDBE program.
It takes a long time to unwind the economic impact that hundreds of years of slavery and segregation have had on Black American wealth, Swift argued. But he believes this program has been successful in turning some of the inequity around.
“This is not a goddamn giveaway program. Nobody’s giving us anything. What they’re doing is opening the door to allow us to participate,” he said.
Without requirements that incentivize the massive companies that dominate airport concessions to partner with local, minority-owned businesses, Swift said those companies are unlikely to keep doing so.
For now, minority- and women-owned businesses that participate in federal, city and state programs are doing their work, fulfilling existing contracts, Strong said. It’s the future they’re now worried about.
“Nobody has their head in the sand,” he said. “Everybody sees the implication of this.”
About the Authors
As a business reporter, Emma Hurt leads coverage of the Atlanta airport, Delta Air Lines, UPS, Norfolk Southern and other travel and logistics companies. Prior to the Atlanta Journal-Constitution she worked as an editor and Atlanta reporter for Axios, a politics reporter for WABE News and a business reporter for the Arkansas Democrat-Gazette.
Mirtha Donastorg is a reporter on The Atlanta Journal-Constitution’s business team focusing on Black wealth, entrepreneurship, and minority-owned businesses as well as innovation at Atlanta’s HBCUs.
